France To Approve First Cryptocurrency Firms Under New Rules

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France is looking to attract initial coin offerings and other cryptocurrency-related organisations amidst controversy over Facebook’s Libra

France is set to approve a number of cryptocurrency-related companies under unusual new regulations set to come into force later this month, the country’s financial regulator said.

Anne Marechal, executive director for legal affairs at France’s Financial Markets Authority, told Reuters the regulator was in talks with “three or four” candidates for initial coin offerings (ICOs).

The agency is also reportedly in talks with several other cryptocurrenc exchange platforms, custodians and fund managers, she said.

The regulations allow cryptocurrency firms to receive regulatory approval in exchange for their voluntary compliance with standards on capital requirements and consumer protection and for paying tax in France.

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“France is a precursor,” Marechal said. “We will have a legal, tax and regulatory framework.”

France, whose president Emmanuel Macron is a former investment banker, is unusual amongst major economies in seeking to construct a recognised regulatory environment for crypto-assets.

The move provides legal clarity for companies involved in the industry, Frederic Montagnon, the co-founder of New York-based cryptocurrency platform LGO, which chose to launch an ICO in France, told Reuters.

France proposed the rules last year, amidst a boom in ICOs, but the number of coin offerings has since dropped as firms turn to other fundraising methods.

Libra controversy

Awareness of cryptocurrencies rose sharply last month after Facebook announced controversial plans to create its own digital coin called Libra.

Later in the same week France said it would use its presidency of the Group of Seven (G7) nations to form a task force to study how central banks can ensure that Libra and similar instruments abide by rules covering areas including money laundering and consumer protection.

“We want to combine being open to innovation with firmness on regulation,” said the governor of France’s central bank, Francois Villeroy de Galhau, at the time. “This is in everyone’s interest.”

Libra has since been criticised by prominent figures in international finance, including the head of the US Federal Reserve and the US Treasury Secretary.